Off-season demand continues to weaken, with short-term prices continuing to fluctuate at highs [Aluminum Scrap Daily Review]

SMM, May 23:

Today, spot primary aluminum prices increased by 10 yuan/mt compared to the previous trading day. SMM A00 aluminum ingot prices closed at 20,370 yuan/mt. Aluminum scrap market prices fluctuated at highs. As we entered late May, the transition between the off-season and peak season occurred. Downstream processing enterprises experienced weak order releases, with procurement primarily driven by immediate needs.
Today, the centralized quotes for baled UBC aluminum scrap ranged from 15,300 to 15,900 yuan/mt (tax not included), while the centralized quotes for shredded aluminum tense scrap ranged from 15,800 to 17,300 yuan/mt (tax not included). Regionally, prices remained stable in multiple areas such as Hubei, Guizhou, and Anhui, with no overall adjustments made. Other regions, including Shanghai, Jiangsu, Henan, and Shandong, closely tracked aluminum prices, with price adjustments ranging from 0 to 50 yuan/mt. In Jiangxi, after an overall increase in aluminum scrap prices on Tuesday, today's quotes remained stable without following the changes in primary aluminum prices.

In the short term, aluminum scrap market prices are expected to continue fluctuating at highs. The tight supply situation for aluminum tense scrap is unlikely to change, providing solid price support. Wrought aluminum alloy scrap will continue to fluctuate rangebound with primary aluminum, but the risk of a high-level correction in primary aluminum prices, combined with weak demand during the off-season, limits upside room. For downstream aluminum scrap-using enterprises, the ongoing struggle between cost pressures and weak terminal orders is expected to keep operating rates low. The narrowing of import losses may partially alleviate supply pressures, but the transmission effect will be limited. Regional and product price differentials may further diverge. Tight supply in regions like South China may support localized price increases, while prices in regions with weak demand will face downward pressure.